Hidden Red Flags to Watch Out for When Buying a Used Car

When you’re on the prowl for a used car, there are a few essential steps you should follow before you ever get close enough for a test drive. Once you've found a strong contender and snagged the VIN number, your next move is to find out everything you can about the vehicle's history to make sure it's not a rolling money pit. The easiest way to do that is to order up a complete Carfax report, which will set you back $40.

There are some areas of a car's history that will always be obvious -- for example, a salvage history or a severe accident that disabled the vehicle should always warrant the biggest of red flags. But there are other, bigger red flags of far greater importance hidden within the minutiae of the report, and they're almost always overlooked. Here's how to dig deep to find tiniest of clues.

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Beware frequent changes in ownership

Why would anyone spend thousands of dollars to buy a car, only to unload it within one year? What if two, three, or four people did the very same thing to the same car? If you look at the bottom of a Carfax report and see that multiple owners have bought and sold the car within a short span of time, you're dealing with what's known in the industry as a "hot potato."

A hot potato almost always has some type of expensive or challenging repair issue. Stay away from these vehicles as if they have a red hot tailpipe spewing out oil and smoke.

Make sure the car recently passed emissions testing

In metropolitan areas that require emissions testing, a significant portion of trade-ins can't pass the test. That's where things start to get dicey. Nearly everywhere in the US, it's 100% illegal for a dealer to sell you a car that doesn’t have a current emissions record -- but that doesn't always hold true for owners. If you see multiple failed emissions tests on a Carfax report, or if the most recent emission test is well over a year old, make sure you ask about this before you waste any more time.

Surprisingly, this red flag can also be a bright green flag if you live in a place that doesn’t require emissions testing. In some rural counties, these cars can and often are bought at a substantial discount. Keep that in mind if you live in an area where emissions tests aren’t needed.

Check if the car has lived in wet or coastal areas

Most folks completely ignore where the car has lived for most of its life -- information which is usually listed on the annual registration renewals and in the service history. Don’t be one of those people. Even if the car has a squeaky clean Carfax history, you always have to worry about the potential problem of rust. Does that car come from the land of snowy streets, or near a beach area? Salt, whether used on the snow or just part of the coastal environment, can really destroy your car's undercarriage. Carfax will also sometimes flag certain used cars registered in areas that experience hurricanes or severe flooding.

Use the records to carefully vet the seller

There exists a set of fraud-seeking souls sometimes referred to as curbstoners, and they sell a lot of cars with red flags aplenty through Craigslist. To figure out if someone's who they say they are -- and that they're really selling that car -- you basically have to cross-examine them as if they were on trial. After you've studied the Carfax history, call them up and hit 'em with some basics: "How long have you owned it," and, "Where have you had repairs and maintenance done," are easily verified bits of info. If their information doesn’t match yours, you just saved yourself -- and your bank account -- from one of the nastiest realities of used car buying.

Avoid a ticking time bomb by ensuring all long-term maintenance is up to date

Some cars require a lot of pricey servicing at a very specific mileage or age, and many sellers will try to avoid those hefty maintenance fees and instead pass a bucket of expenses off to the next owner. While Carfax histories tend to be very good at tracking a car's maintenance record, not every dealership or independent shop works with Carfax. So when you ask about this -- and it is important that you ask -- make sure to get the specifics of where the work was done and verify it by contacting that repair facility directly.